The bankruptcy laws used to be a lot less strict and demanding. They didn't really have strict requirements for who could file. It was when people began to take unfair advantage of the system, filing when they really didn't have to, and actually planning for bankruptcy filings as a routine part of getting out of their obligations, that the lawmakers realized that the bankruptcy law had to be tightened up. The Bankruptcy Abuse Prevention and Consumer Protection Act when it came around in the or 2005 was what made it very difficult for people who liked to game the system. Now, shopping to your heart's content and then planning for bankruptcy to get out of your obligations is a lot harder. Today, before you actually plan any filing, you need to take a close look at the law as it stands modified, to see if you are still allowed the option.
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So what kind of changes are made to the bankruptcy law that make filing for bankruptcy a little more difficult? Consider how it used to be that anyone could choose what Chapter they filed under. One isn't free to do this anymore. Once you are granted the right to file under Chapter 7, things don't proceed as they used to either. For instance, it used to be that the person who did the filing could value their property at auction price. They don't allow that anymore. The law fixes the value of personal property to sell on its own - and uses retail pricing. This makes it more likely that property will be repossessed and sold. And now, the amount of your personal property that you can keep can only be determined by the law of the state you live in if you've lived there at least two years. And more painful than anything else, the law now tells you how much exactly it will allow you for food and living expenses - about $1000 a month is all you get. It used to be under the old law that you could ask for funds to live the way you were used to living.
It isn't just people in debt who find the new bankruptcy law changes the game for them. The credit card companies have all kinds of changes to take into account too. They have to help people out showing them what exactly it will mean to their financial lives paying the minimum payment each month. Borrowers have to be able to see how long it will take them to pay their balances off if they go at the minimum payment rate. Lawyers need to charge more too, because the new bankruptcy law is a lot stricter about making sure that everyone of its requirements is met. Since Chapter 7 is so expensive to file under now, most people filing for bankruptcy are forced to pick Chapter 13 instead. When they do that, they are made to be far more responsible for their debts than under Chapter 7.
If the effect of these new bankruptcy laws is to make bankruptcy filings more difficult and to discourage the choice in this option that people might take, that is only for the best. People do need to learn to not live their lives on borrowed money.
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